BENEFICIARY DESIGNATIONS: Top 10 Tips for Medical Professionals

Posted on April 14, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Beneficiary designations can provide a relatively easy way to transfer an account or insurance policy upon your death. However, if you’re not careful, missing or outdated beneficiary designations can easily cause your estate plan to go awry.

Where you can find them

Here’s a sampling of where you’ll find beneficiary designations:

  • Employer-sponsored retirement plans [401(k), 403(b), etc.]
  • IRAs
  • Life insurance policies
  • Annuities
  • Transfer-on-death (TOD) investment accounts
  • Pay-on-death (POD) bank accounts
  • Stock options and restricted stock
  • Executive deferred compensation plans
  • In several states, so-called “lady bird” deeds for real estate

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10 tips about beneficiary designations

Because beneficiary designations are so important, keep these things in mind in your estate planning:

  1. Remember to name beneficiaries. If you don’t name a beneficiary, one of the following could occur:
    • The account or policy may have to go through probate. This process often results in unnecessary delays, additional costs, and unfavorable income tax treatment.
    • The agreement that controls the account or policy may provide for “default” beneficiaries. This could be helpful, but it’s possible the default beneficiaries may not be whom you intended.
  2. Name both primary and contingent beneficiaries. It’s a good practice to name a “back up” or contingent beneficiary in case the primary beneficiary dies before you. Depending on your situation, you may have only a primary beneficiary. In that case, consider whether it may make sense to name a charity (or charities) as the contingent beneficiary.
  3. Update for life events. Review your beneficiary designations regularly and update them as needed based on major life events, such as births, deaths, marriages, and divorces.
  4. Read the instructions. Beneficiary designation forms are not all alike. Don’t just fill in names — be sure to read the form carefully. If necessary, you can draft your own customized beneficiary designation, but you should do this only with the guidance of an experienced attorney or tax advisor.
  5. Coordinate with your will and trust. Whenever you change your will or trust, be sure to talk with your attorney about your beneficiary designations. Because these designations operate independently of your other estate planning documents, it’s important to understand how the different parts of your plan work as a whole.
  6. Think twice before naming individual beneficiaries for particular assets. For example, you may establish three accounts of equal value initially and name a different child as beneficiary of each account. Over the years, the accounts may grow or be depleted unevenly, so the three children end up receiving different amounts — which is not what you originally intended.
  7. Avoid naming your estate as beneficiary. If you designate a beneficiary on your 401(k), for example, it won’t have to go through probate court to be distributed to the beneficiary. If you name your estate as beneficiary, the account will have to go through probate. For IRAs and qualified retirement plans, there may also be unfavorable income tax consequences.
  8. Use caution when naming a trust as beneficiary. Consult your attorney or CPA before naming a trust as beneficiary for IRAs, qualified retirement plans, or annuities. There are situations where it makes sense to name a trust — for example if:
    • Your beneficiaries are minor children
    • You’re in a second marriage
    • You want to control access to funds
  9. Be aware of tax consequences. Many assets that transfer by beneficiary designation come with special tax consequences. It’s helpful to work with an experienced tax advisor to help provide planning ideas for your particular situation.
  10. Use disclaimers when necessary — but be careful. Sometimes a beneficiary may actually want to decline (disclaim) assets on which they’re designated as beneficiary. Keep in mind that disclaimers involve complex legal and tax issues and require careful consultation with your attorney and CPA.

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PHYSICIAN ESTATE PLANNING: Choosing a Personal Representative or Executor for Your Last Will and Testament

Posted on March 14, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd CMP®

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Your Executor or personal representative is named in your Will and is responsible for management of assets subject to probate. A basic checklist of the duties of the personal representative looks like this:

  1. Gather all estate assets;
  2. Collect all amounts owed the decedent;
  3. Notify creditors and paying all valid debts;
  4. Selling assets as needed to pay expenses or as directed by the Will;
  5. Distribute assets to beneficiaries;
  6. File decedents final federal income tax return;
  7. File an estate tax return if the estate is large enough; and
  8. File inventories and annual returns with the probate court, if required.

The position requires a lot of responsibility and involves many duties and a considerable commitment of time. The personal representative must petition the probate court for formal appointment.

Selection of your personal representative should not be made lightly, or as a favor to a friend.  It requires a lot of work and very often for little or no pay.  Friends and family typically will not charge the estate for their time and work.  Outside advisers like attorneys and accountants will not hesitate to bill for their work effort.  A few items for your selection criteria should be:

  1. Longevity – the person should have a likelihood of being able to serve after your death;
  2. Skill in managing legal and financial affairs;
  3. Familiarity with your estate and wishes;
  4. Integrity and loyalty; and
  5. Impartiality and absence of conflicts of interest.

Alternatives to family or friends might be a corporate executor, such as a bank, an attorney, or other adviser.  Similar criteria should be used in the selection of a trustee.

EDUCATION: Books

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INHERITANCE: Disclaimers

Posted on February 25, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

DEFINITION

“Show Me the Money”

By Staff Reporters

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In some situations, an inheritance might complicate an estate and add to the estate tax burden.  If there are sufficient assets and income to accomplish financial goals, more assets are not needed. A disclaimer may be useful.  This is an unqualified refusal to accept a gift or inheritance, that is, when you “just say no”.  You have decided not to accept a sizable gift made under a will, trust or other document. 

When you disclaim the property, certain requirements must be met:

  • The disclaimer must be irrevocable;
  • The refusal must be in writing;
  • The refusal must be received within nine months;
  • You must not have accepted any interest in the property; and
  • As a result of the refusal, the property will pass to someone else.

The property passes under the terms of the decedents will, as if you had predeceased the decedent. If the filer of the disclaimer has control, the property will be included in the disclaimant’s estate and can only be passed to another as a gift for as an inheritance. The intent of the disclaimer is to renounce and never take control of the property.

EDUCATION: Books

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Helping Physicians Find a Trustworthy Trustee

Posted on May 15, 2012 by Dr. David Edward Marcinko MBA MEd CMP™

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Estate Planning Basics

By Rick Kahler MS CFP® ChFC CCIM

www.KahlerFinancial.com

Trusts are effective financial planning tools based on a structure that is simpler than it may seem. The creator of the trust [doctor-layman, etc] contributes something of value into the trust and creates instructions as to how it will be managed and eventually disbursed. The trustee [third party] is responsible for keeping the property safe and managing and distributing it according to the instructions. The beneficiary [spouse-children, etc ] is the person or entity that eventually will get the property in the trust.

Trusts may be useful in estate planning, asset protection, and providing for elderly parents or other family members who may be unable to manage their own affairs.

Establishing a trust isn’t especially difficult, but it’s not a do-it-yourself project. It’s important to work with an attorney to be sure the trust complies with legal requirements and will actually carry out its intended purpose.

Trustee Selection

What may be the hardest part of setting up a trust is choosing the trustee. Here are a few suggestions that may help. Some of them come from information provided by the Financial Planning Association [FPA]:

1. Be sure you as the creator of the trust understand the trustee’s role. Ideally, trustees will have some expertise in legal matters, taxes, and investments. The specific knowledge needed will vary, depending on the scope and purpose of the trust. It’s important to discuss that purpose in detail with any potential trustees to be sure they have the necessary skills and are comfortable taking on the responsibilities.

2. Consider the pros and cons of choosing a personal or a professional trustee. Generally your choice will come from one of three categories: A personal trustee who is a close friend or family member, a personal trustee who is a professional advisor, or a corporate trustee such as a bank’s trust department.

A family member or close friend may already have inside knowledge of your circumstances, as well as having personal relationships with the beneficiaries of the trust and a personal commitment to carrying out your wishes. The possible downside is that the trustee may have conflicts of interest or find it difficult to enforce some trust provisions.

Professional advisors such as attorneys or accountants will have specialized knowledge that may be important. Even advisors who have worked closely with you will have a level of professional detachment that may make it easier to carry out your wishes, especially any that involve saying “no.”

With a corporate trustee, the relationship is with the firm rather than an individual, which provides continuity and protects the trust even if the original trustee is unable to continue serving. The downside is the lack of detailed personal knowledge and involvement.

3. Evaluate costs. Professional or corporate trustees will, of course, charge for their services. Friends or family members may not charge fees but really should be compensated appropriately. State laws govern the maximum fees trustees can charge and the specific services provided.

4. A commitment to take on the responsibilities of the trust and to carry out your wishes with integrity may be the most important quality for a trustee. Someone without financial and legal knowledge can always get help from professional advisors.

Assessment

Finally, remember doctor, the word “trustee” isn’t used by accident or coincidence. The trustee’s role is to act in your stead when you are unable to, managing the assets of the trust with the same care you would use and making the decisions you would make in the best interests of the beneficiary of the trust. The most essential factor in choosing a trustee is finding someone you can rely on to act on your behalf.

Who is, in short, trustworthy?

Conclusion

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